Federal Reserve to Likely Raise Interest Rates in March with Potential Slow Down in May

03/15/2023 22:57 • Blockchain Briefs • 88 views

According to CME’s “Federal Reserve observation”, the probability of the Federal Reserve keeping interest rates unchanged in March is 20.3%, the probability of raising interest rates by 25 basis points to the range of 4.75% – 5.00% is 79.7%, and the probability of raising interest rates by 50 basis points to the range of 5.00% – 5.25% continues to be 0%; The probability of a cumulative interest rate increase of 50 basis points in May will fall to 0%.

The probability that the Federal Reserve will keep the interest rate unchanged in March fell to 20.3%

Analysis based on this information:

The Federal Reserve’s rate-setting Federal Open Market Committee (FOMC) is set to meet next week for the first time since December last year. While no change in interest rates was made during its last meeting, CME’s “Federal Reserve observation” suggests that there is a 79.7% probability of raising interest rates by 25 basis points to the range of 4.75% – 5.00% in March. This is accompanied by a low probability of the central bank keeping interest rates unchanged at 20.3%.

The message also indicates that there is no possibility for a 50 basis points increase in interest rates – staying consistent with the previous observation, thus eliminating the possibility of a 5.00% – 5.25% interest rates range. Furthermore, the likelihood of a cumulative interest rate increase of 50 basis points in May has fallen to 0%. This change may be due to various factors such as uncertainty in global trading or tapering of debt purchases.

The Fed is expected to balance concerns of inflation and economic growth rates while avoiding a potential recession. The U.S. economy has shown consistent growth, low unemployment rates, and inflation, although worrying, is still within the Fed’s target range. One of the factors that may lead the Fed to raise interest rates would be to keep inflation in check, particularly in relation to the labor market which shows signs of improvement.

In conclusion, the probability of a 25 basis point increase in interest rates during the next FOMC meeting is high. The outlook for a 50 basis point increase in May has, however, reduced to 0%. The Federal Reserve’s decision will have ripple effects, particularly for the USD exchange rate as traders assess the impact of the interest rate decision. Investors should closely monitor the announcement to make an informed decision if considering a position in the markets.

This article and pictures are from the Internet and do not represent aiwaka's position. If you infringe, please contact us to delete:https://www.aiwaka.com/2023/03/15/federal-reserve-to-likely-raise-interest-rates-in-march-with-potential-slow-down-in-may/

It is strongly recommended that you study, review, analyze and verify the content independently, use the relevant data and content carefully, and bear all risks arising therefrom.